WSC/2005 LLC, et al.
TRIO VENTURES ASSOCIATES, et al.
Circuit Court for Montgomery County Case No.: 414402V
Barbera, C.J., Greene, Adkins, McDonald, Watts, Hotten,
is a procedure frequently imposed by contract but seldom the
topic of Maryland appellate decisions. In this appeal, we
determine whether a court may vacate an arbitrator's
decision for manifest disregard of applicable law even though
such a ground is not listed in the Md. Code (1973, 2013 Repl.
Vol.), § 3-224(b) of the Court and Judicial Proceedings
Article ("CJP"). Applying this standard, along with
the express statutory grounds to vacate arbitral awards, we
then consider whether a circuit court erred in refusing to
vacate the award in question.
commercial dispute centers on real properties located in
Montgomery County, Maryland. The Washington Science Center
Joint Venture ("WSCJV") owns land and commercial
buildings on Executive Boulevard in Rockville, Maryland.
Although the WSCJV owns several properties, only two are
relevant to this appeal: 6100 Executive Boulevard and 6011
Executive Boulevard. Respondents Trio Venture Associates,
Myron Levin, Jean Levin, Lawrence Guss, and the Guss Family
Limited Partnership (collectively "Trio") owned 58
1/3% of the WSCJV.
2005, Trio and the remaining joint venturers were embroiled
in contentious litigation stemming from Trio's attempted
sale of its ownership interest. During this litigation, the
parties reached a settlement. As part of the settlement, Trio
sold its ownership interest to Petitioners WSC/2005 LLC, and
Simon and Ruth Wagman (collectively "WSC").
parties set out the terms of this transfer in a Purchase and
Sale Agreement ("PSA"). The PSA provided several
detailed provisions regarding the price WSC would pay for
Trio's ownership interest. Paragraphs 3.A-3.C required an
initial payment of $10 million from WSC to Trio. Paragraph
3.E also required WSC to pay an additional $3.5 million if
one of two things happened. First, the payment was required
if the government tenants at 6011 or 6100 Executive Boulevard
renewed their leases for at least ten years. Second, payment
was required if, in the event that the government tenants did
not renew, both 6011 and 6100 Executive Boulevard, "in
the aggregate are not less than seventy-five percent (75%)
leased to and occupied by tenants for terms of not less than
five (5) years in each case (excluding options) . . . ."
This paragraph also provided that it was "understood
that WSCJV [would] use commercially reasonable efforts to
obtain renewal leases on terms and conditions acceptable to
WSCJV as soon as is practical."
parties signed the PSA on August 17, 2005. One year later,
WSC sold 6100 Executive Boulevard to a third party. Trio
maintains that it did not receive notification of the sale.
In 2010, Trio, still unaware that the property had been sold,
sent an e-mail to WSC asking about the leasing status at both
6100 and 6011 Executive Boulevard. A representative from WSC
responded by explaining that the government leases-which were
in place when the property transferred from Trio to WSC-did
not expire until 2014. The message indicated that the
earliest time the payment under Paragraph 3.E would be due
was 2014. According to Trio, it then ran a title search on
6011 Executive Boulevard in January of 2014, which revealed
that WSC had sold the building. This discovery led to the
dispute giving rise to this appeal.
sent WSC a letter asserting that WSC had an obligation to
lease 6100 Executive Boulevard and that Trio was misled into
thinking that WSC remained the owner. The letter argued that
"the sale of [6100 Executive Boulevard] triggered the
payment due under Paragraph 3.E [of the PSA]." After WSC
refused to acknowledge any right to additional payment
stemming from the sale of 6100 Executive Boulevard, Trio
filed a demand for arbitration. The demand asserted five
claims stemming from WSC's sale of the property: (1)
payment due under terms of purchase and sale agreement; (2)
payment due as a result of fraudulent contract performance;
(3) payment due for failure to comply with commercially
reasonable standards requirement; (4) payment due as a result
of unjust enrichment; and (5) failure to provide information.
WSC moved to dismiss the demand and argued that the PSA did
not require an additional payment under Paragraph 3.E until
the leasing condition occurred. According to WSC, the
"leasing contingency" only required payment when
the leases at the buildings were renewed, or if they were
re-leased at certain thresholds.
moved for summary judgment, arguing that the sale
deliberately frustrated and destroyed any possibility that
WSC could fulfill the leasing contingency. After a hearing on
the motions, the Arbitrator issued an opinion dismissing some
of Trio's claims,  but granting Trio's motion for summary
judgment on the issue of whether WSC breached the PSA by
selling 6100 Executive Boulevard. The Arbitrator concluded
that the sale of 6100 Executive Boulevard breached the PSA
and required WSC to pay Trio the $3.5 million fee specified
in Paragraph 3.E. We shall discuss the reasoning of the
Arbitrator's decision in more detail infra.
thereafter, WSC filed a petition to vacate the arbitration
award in the Circuit Court for Montgomery County pursuant to
CJP § 3-224. The petition argued that the Arbitrator
"manifestly disregarded well-established Maryland law in
several significant respects," and that the Arbitrator
wrongly concluded that WSC breached the PSA by selling 6100
Executive Boulevard. Trio moved to dismiss the petition,
arguing that WSC had not alleged any of the statutorily
permitted vacatur grounds enumerated at CJP § 3-244(b).
Trio also filed a request, pursuant to CJP §
3-228(a)(2), for the attorney's fees and costs incurred
in defending and enforcing the arbitration award in the
Circuit Court. After a hearing, the Circuit Court dismissed
the petition. The order stated that the arbitration award did
"not manifestly disregard applicable law" but
denied Trio's request for attorney's fees and costs.
filed a timely appeal in the Court of Special Appeals. The
intermediate appellate court, in an unreported decision,
affirmed the Circuit Court's order. WSC/2005 LLC v.
Trio Venture Assocs., Nos. 946, 1531 & 1784, 2017 WL
4422973, at *7 (Md. Ct. Spec. App. Oct. 5, 2017). The Court
concluded that "the [A]rbitrator's award is fully
supported by the language in the PSA and in accordance with
applicable law." Id.
issued a writ of certiorari to answer the following
(1) May an arbitral award be set aside for manifest disregard
of applicable law according to the MUAA?
(2) Did the arbitration award manifestly disregard applicable
(3) Does a circuit court have discretion to deny a request
made, pursuant to CJP § 3-228(a)(2), for an award of the
attorney's fees and costs incurred in defending or
enforcing the arbitration award?
that the MUAA does permit a party to challenge an arbitration
award for manifest disregard of the law. According to this
standard though, the Circuit Court correctly concluded that
the Arbitrator's award did not manifestly disregard the
law. We also hold that a circuit court has discretion to
award or deny attorney's fees to a party seeking to
vacate or confirm an arbitration award.
MUAA is a comprehensive statute governing the arbitration
process in Maryland. CJP §§ 3-201, et
seq.; Walther v. Sovereign Bank, 386 Md. 412,
423-24 (2005). Once the arbitrator issues an award, the
MUAA-CJP § 3-224(b) specifically-provides certain
grounds upon which a circuit court shall vacate an award:
(b) Grounds. - The court shall vacate an award if:
(1) An award was procured by corruption, fraud, or other
(2) There was evident partiality by an arbitrator appointed
as a neutral, corruption in any arbitrator, or misconduct
prejudicing the rights of any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing upon
sufficient cause being shown for the postponement, refused to
hear evidence material to the controversy, or otherwise so
conducted the hearing, contrary to the provisions of §
3-213 of this subtitle, as to prejudice substantially the
rights of a party; or
(5) There was no arbitration agreement as described in §
3-206 of this subtitle, the issue was not adversely
determined in proceedings under § 3-208 of this
subtitle, and the party did not participate in the
arbitration hearing without raising the objection.
(c) further provides that "[t]he court shall
not vacate the award or refuse to confirm the award
on the ground that a court of law or equity could not or
would not grant the same relief." (Emphasis added).
circuit court's decision to grant or deny a petition to
vacate or confirm an arbitration award is a conclusion of
law, which we review without deference. See, e.g.,
Prince George's Cty. Police Civilian Emps. Ass'n
v. Prince George's Cty., 447 Md. 180, 192 (2016)
("An appellate court reviews without deference a trial
court's ruling on a petition to vacate an arbitration
award."). The parties agree on this point but dispute
the appropriate standard upon which a court must evaluate the
maintains that the vacatur grounds set forth in CJP §
3-224(b) are not exclusive. Specifically, WSC argues that, in
addition to the grounds set forth in subsection (b), a court
may set aside an arbitration award when the award manifestly
disregards applicable law. Although the MUAA provides
specific grounds for vacatur, WSC contends that the statute
was never intended to eliminate the common-law grounds of
vacatur, chiefly manifest disregard of the law. Trio's
response to this contention is sparse. Rather than addressing
WSC's contention that the MUAA did not abrogate
common-law vacatur grounds, Trio asserts that WSC has
attempted to undo the Arbitrator's decision merely
because it disagrees with the award. We begin by assessing
whether the MUAA abrogates or otherwise eliminates the
common-law vacatur grounds of "manifest disregard of